FACTBOX-Banks say a Le Pen win would be bad for European markets, but how bad?

LONDON, April 5 (Reuters) - The countdown to the next political event market participants are keeping a keen eye on - the two-stage French presidential election - has started.

Far-right, eurosceptic Marine Le Pen is one of the leading candidates though her likely opponent in the final round of the race, centrist Emmanuel Macron, leads in the polls. tmsnrt.rs/2jLwO20

Below is a round-up of probabilities that strategists and economists at banks assign to various outcomes, and financial market scenarios associated with them.

French banks themselves have not issued forecasts for the election or commented on its impact.

CITI:

Probability of a Le Pen win: 20 percent

Citi’s base case (40 percent probability) is a Francois Fillon win, while Macron has a 35 percent chance according to the bank’s calculations.

Market impact of a Le Pen win: Euro to drop initially, “possibly sharply”. Bonds to sell off on perceptions of devaluation scenarios, 10-year OAT-Bund spread to rise to nearer 200 basis points. French equities to fall 5 to 10 percent to end-June 2017.

Market impact of a Fillon win: Ten-year OAT-Bund spreads to come back down to 35-40 basis points, Euro to rise

DEUTSCHE BANK:

Probability of a Le Pen win: 25 percent

Market impact of a Le Pen win: European equities to fall about 15 percent

Market impact of a Macron win: Limited scope for relief rally as valuations already high

JPMORGAN:

Probability of a Le Pen win: 25 percent

Market impact of a Le Pen win: French stocks to fall by double digits, French bond spreads to widen 200-300 bps, euro to fall to $0.98

Market impact of a Macron win: Eurozone equities to see a return of significant global investor flows, to the tune of at least 10 percent of current assets under management.

LA FRANCAISE ASSET MANAGEMENT:

Probability of a Le Pen win: “relatively low”

Market impact of a Le Pen win: France’s blue-chip CAC 40 index to fall up to 20 percent, French rates to spike 3 percent, euro to drop 10 percent. Euro stocks could fall 15 percent, and Italian assets would also be impacted, with a possible 20 percent drop on Milan’s FTSE MIB.

MORGAN STANLEY:

Probability of a Le Pen win: 15 percent

Market impact of a Le Pen win: double-digit losses on European stocks and the euro, OAT spreads widen to about 120 basis points. Italian government bonds have more downside with spreads widening to 300 basis points.

Market impact of a Macron win: French banking stocks including BNP Paribas and Societe Generale to rally 15-20 percent.